The US Federal Reserve (FRS) has engaged the Massachusetts Institute of Technology (MIT) to study the impact of the DLT and the digital dollar on the financial system.
This was announced by a member of the Board of Directors of the US Federal Reserve Lael Brainard (Lael Brainard). She mentioned DLT tests, which have been conducted by the US Central Bank for several years. The regulator is investigating the impact of the digital currency on the existing payment ecosystem, monetary policy and the banking sector, and whether the digital dollar could become a threat to financial stability.
According to Brainard, the coronavirus pandemic has heightened the need for a resilient payment infrastructure that is accessible to all Americans. In March, US Democratic Party deputies planned to present a bill aimed at stimulating the American economy amid the pandemic. It included provisions for a digital dollar that was to be used to make payments. However, these provisions were later removed from the bill.
In November, US Federal Reserve Chairman Jerome Powell said the Fed was carefully analyzing the potential and weaknesses of the digital dollar. However, Powell does not see any special advantages in it for American users, since the US payment system is quite developed.
The Fed continues to research digital currencies to gain a deeper understanding of how they work. The Fed began partnering with Massachusetts Institute of Technology to create and test a hypothetical digital currency targeting central banks. In the future, the results of these experiments will be presented in the public domain.
“Stablecoins from central banks have advantages and disadvantages. Digital currencies carry the risks of illegal activities and can disrupt financial stability. Therefore, it is necessary to work out the provisions governing the release of state cryptocurrencies, as well as their use at the public level and the government level, ”said Lael Brainard.
Note that last month the American Bankers Association (ABA) opposed the digital dollar, believing that it would give too much power to the US Federal Reserve.